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Why Western Digital Stock Got Crushed Today

By Evan Niu, CFA – Aug 6, 2020 at 2:36PM

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The computer storage specialist reported quarterly earnings results and issued a disappointing forecast.

What happened

Shares of Western Digital (WDC 5.93%) have gotten crushed today, down by 16% as of 1:30 p.m. EDT, after the company reported fiscal fourth-quarter earnings. The results were mixed compared to expectations and guidance left a lot to be desired.

So what

Revenue in the fiscal fourth quarter was $4.29 billion, shy of the $4.34 billion in sales that the market was hoping for. That resulted in adjusted earnings per share of $1.23, narrowly topping Wall Street's forecast of $1.22 per share in adjusted profits. The computing storage technology company incurred $96 million in incremental costs related to the COVID-19 outbreak.

Close-up of two SSD cards

Image source: Getty Images.

"While we continue to navigate through a dynamic environment, we remain focused on managing the business for the long-term, including ramping two important product lines to high volume: our SSD products and our energy-assisted capacity enterprise drives," CEO David Goeckeler said in a statement. "We will continue to deliver the quality, performance and cost-effectiveness our customers rely on, and I am confident that our end market diversity and breadth, broad customer base, channel reach, and innovative leadership all position Western Digital to benefit from the multi-year growth in data creation and storage."

Now what

Guidance for the next quarter calls for revenue of $3.7 billion to $3.9 billion, which is significantly below the $4.4 billion in sales that analysts were expecting. Adjusted earnings per share should be $0.45 to $0.65, compared to the consensus estimate of $1.32 per share.

On the conference call with analysts, management noted that the company faced significant supply chain disruptions during the fiscal year due to the coronavirus.

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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